Minnesota Endorses Xcel's Interstate Investment Plan

Mon, 2017-09-11 08:27 — meacott

In reliance on a previously approved integrated resource plan (IRP) for an electric utility, the Minnesota Public Utilities Commission has authorized the utility, Xcel Energy, to proceed with its proposed development of several large-scale wind facilities.

The company's long-range IRP, which covers the 2016-2030 period, had been grounded on the addition of at least 1,550 megawatts (MW) of wind power to its generation portfolio. Xcel stated that it intends to build and own four separate projects in Minnesota and North Dakota that would account for 750 MW of the total wind capacity. The remaining 800 MW would be purchased from three other projects not owned by the utility. According to Xcel, its wind energy plan marks the single largest utility-backed multi-state investment in wind power in the country.

In incorporating a much greater proportion of wind capacity in its IRP, the utility explained that wind resources represented an opportunity to bring "tremendous economic value" to its customers. The company elaborated that not only is wind a clean, green source of generation, but it encompasses financial benefits as well. That is, Xcel said, because wind energy is now available at much lower prices than before, and because wind technology has evolved to become a reliable source of power, it made sense both economically and environmentally to transition more and more toward wind energy. The company added that by utilizing wind more broadly, its customers will no longer be faced with the volatility that often accompanies conventional fossil fuel-fired generating plants.

In deeming Xcel's plan reasonable, the commission noted that it had reviewed the proposal under several different scenarios, some of which factored in the emission reduction attributes of wind energy and some of which did not. However, the commission reported, it discovered that under every cost model examined, the wind portfolio would produce net savings for ratepayers. Consequently, the commission ruled that the wind power plan was consistent with the overall public interest.

The commission also commented that the utility's wind proposal would position it well for purposes of compliance with the state's renewable energy standard (RES). The commission related that Minnesota's RES requires that a minimum of 24% of a utility's generation be from renewable resources by 2020. The commission observed that not only would the wind power plan help Xcel attain that goal, but that it would do so in a least-cost manner.

The commission remarked that the wind proposal's economics were all the more favorable due to all of the projects being eligible for 100% of the production tax credit, provided the facilities are all in commercial operation by the end of 2020. The time-sensitive aspect of the wind plan was something the commission took into consideration when deciding whether to preapprove a cost recovery mechanism for Xcel.

Although some parties had objected to giving the company assurance up front that it may recoup all of its investment, the commission found that a delay in approving a cost recovery device could place certain projects in jeopardy or cause them to miss out on the production tax credit. In the end, the commission agreed to a cost recovery plan under which Xcel would be allowed to retain any cost savings associated with the wind projects versus other generating resources, but also would have to shoulder any cost overruns encountered. The commission said the plan demonstrated a fair balancing of ratepayer versus company interests.

The four wind farms the utility expects to build itself are the 150- MW Foxtail facility near Ellendale, North Dakota; the 200-MW Blazing Star I and 200-MW Blazing Star II projects in Lincoln County, Minnesota; and the 200-MW Freeborn complex near Glenville, Minnesota. The three wind farms from which Xcel will be acquiring the output include the 600-MW Crowned Ridge facility in Codington County, South Dakota; the 100-MW Lake Benton project in Pipestone County, Minnesota; and the 100-MW Clean Energy #1 project, in Mercer and Morton counties, North Dakota.

Besides the Upper Midwest wind projects listed above, Xcel had announced earlier in the year that it likewise anticipates investing in another 600-MW wind facility in Colorado and three wind projects in Texas and New Mexico that have a combined capacity of 1,230 MW. Re Xcel Energy, Docket No. E-002/M-16-777, Sept. 1, 2017 (Minn.P.U.C.).